Johnson & Johnson JNJ stock-sample analysis report intrinsic value
12
Click here to load reader
description
johnson and johnson stock analysis and intrinsic value calculation. A detailed look at the numbers and ratios.
Transcript of Johnson & Johnson JNJ stock-sample analysis report intrinsic value
Author
Jae Junmail questions or comments to: [email protected]
www.oldschoolvalue.com
DisclaimerNothing on Old School Value, related pages, emails, or other communications by the author, either written or oral, are intended to be a
recommendation to either buy, hold, or sell any specific security or group of securities. Likewise, nothing herein should be construed as an
endorsement of any financial adviser, investment manager, commercial information provider, transaction service, or brokerage firm.
The findings from this spreadsheet is merely a start to a means of further research and uncovering a great business and investment. Old
School Value holds no responsibility for any investment whatsoever.
2/18/2009
JNJ 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 TTM
Revenue 23,657.0$ 27,471.0$ 29,139.0$ 33,004.0$ 36,298.0$ 41,862.0$ 47,348.0$ 50,514.0$ 53,324.0$ 61,095.0$ 64,522.0$
COGS 7,496.0$ 8,442.0$ 8,861.0$ 9,536.0$ 10,447.0$ 12,176.0$ 13,422.0$ 13,954.0$ 15,057.0$ 17,751.0$ 18,873.0$
COGS (%) 31.7% 30.7% 30.4% 28.9% 28.8% 29.1% 28.3% 27.6% 28.2% 29.1% 29.3%
Gross Profit 16,161.0$ 19,029.0$ 20,278.0$ 23,468.0$ 25,851.0$ 29,686.0$ 33,926.0$ 36,560.0$ 38,267.0$ 43,344.0$ 45,649.0$
Gross Profit (%) 68.3% 69.3% 69.6% 71.1% 71.2% 70.9% 71.7% 72.4% 71.8% 70.9% 70.7%
SG&A 8,907.0$ 10,503.0$ 10,875.0$ 11,992.0$ 12,216.0$ 14,131.0$ 15,860.0$ 16,877.0$ 17,433.0$ 20,451.0$ 21,546.0$
SG&A (%) 37.7% 38.2% 37.3% 36.3% 33.7% 33.8% 33.5% 33.4% 32.7% 33.5% 33.4%
R&D 2,433.0$ 2,600.0$ 2,980.0$ 3,696.0$ 4,146.0$ 5,602.0$ 5,221.0$ 6,674.0$ 7,684.0$ 8,487.0$ 7,837.0$
R&D (%) 10.3% 9.5% 10.2% 11.2% 11.4% 13.4% 11.0% 13.2% 14.4% 13.9% 12.1%
Other 704.0$ 222.0$ 34.0$ 185.0$ 294.0$ (385.0)$ 15.0$ (214.0)$ (671.0)$ 1,279.0$ 534.0$
Other (%) 3.0% 0.8% 0.1% 0.6% 0.8% -0.9% 0.0% -0.4% -1.3% 2.1% 0.8%
Operating Income 4,117.0$ 5,704.0$ 6,389.0$ 7,595.0$ 9,195.0$ 10,338.0$ 12,830.0$ 13,223.0$ 13,821.0$ 13,127.0$ 15,732.0$
Operating Income (%) 17.4% 20.8% 21.9% 23.0% 25.3% 24.7% 27.1% 26.2% 25.9% 21.5% 24.4%
Net Int Inc & Other 152.0$ 49.0$ 233.0$ 303.0$ 96.0$ (30.0)$ 8.0$ 433.0$ 766.0$ 156.0$ 300.0$
Earnings Before Taxes 4,269.0$ 5,753.0$ 6,622.0$ 7,898.0$ 9,291.0$ 10,308.0$ 12,838.0$ 13,656.0$ 14,587.0$ 13,283.0$ 15,744.0$
Income Taxes 1,210.0$ 1,586.0$ 1,822.0$ 2,230.0$ 2,694.0$ 3,111.0$ 4,329.0$ 3,245.0$ 3,534.0$ 2,707.0$ 3,135.0$
Earnings After Taxes 3,059.0$ 4,167.0$ 4,800.0$ 5,668.0$ 6,597.0$ 7,197.0$ 8,509.0$ 10,411.0$ 11,053.0$ 10,576.0$ 12,609.0$
Acctg Changes -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Disc Operations -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Ext Items -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Net Income 3,059.0$ 4,167.0$ 4,800.0$ 5,668.0$ 6,597.0$ 7,197.0$ 8,509.0$ 10,411.0$ 11,053.0$ 10,576.0$ 12,609.0$
Net Income (%) 12.9% 15.2% 16.5% 17.2% 18.2% 17.2% 18.0% 20.6% 20.7% 17.3% 19.5%
Diluted EPS, Cont Ops$ -$ 1.5$ 1.7$ 1.8$ 2.2$ 2.4$ 2.8$ 3.5$ 3.7$ 3.6$ 4.4$
Diluted EPS$ -$ 1.5$ 1.7$ 1.8$ 2.2$ 2.4$ 2.8$ 3.5$ 3.7$ 3.6$ 4.4$
Shares 0 2834 2823 3080 3054 2998 2996 3008 2963 2913 2859
Cash and Equiv 1,927.0$ 2,363.0$ 3,411.0$ 3,758.0$ 2,894.0$ 5,377.0$ 9,203.0$ 16,055.0$ 4,083.0$ 7,770.0$ 14,018.0$
Short-Term Investments -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Accts Rec 3,661.0$ 4,233.0$ 4,464.0$ 4,630.0$ 5,399.0$ 6,574.0$ 6,831.0$ 7,010.0$ 8,712.0$ 9,444.0$ 10,156.0$
Inventory 2,853.0$ 3,095.0$ 2,842.0$ 2,992.0$ 3,303.0$ 3,588.0$ 3,744.0$ 3,959.0$ 4,889.0$ 5,110.0$ 5,473.0$
Other Current Assets 2,691.0$ 3,509.0$ 4,733.0$ 7,093.0$ 7,670.0$ 7,456.0$ 7,542.0$ 4,370.0$ 5,291.0$ 7,621.0$ 6,943.0$
Total Current Assets 11,132.0$ 13,200.0$ 15,450.0$ 18,473.0$ 19,266.0$ 22,995.0$ 27,320.0$ 31,394.0$ 22,975.0$ 29,945.0$ 36,590.0$
Net PP&E 6,240.0$ 6,719.0$ 6,971.0$ 7,719.0$ 8,710.0$ 9,846.0$ 10,436.0$ 10,830.0$ 13,044.0$ 14,185.0$ 14,355.0$
Intangibles 7,209.0$ 7,571.0$ 7,256.0$ 9,077.0$ 9,246.0$ 11,539.0$ 11,842.0$ 12,175.0$ 28,688.0$ 28,763.0$ 28,571.0$
Other Long-Term Assets 1,630.0$ 1,673.0$ 1,644.0$ 3,219.0$ 3,334.0$ 3,883.0$ 3,719.0$ 3,626.0$ 5,849.0$ 8,061.0$ 8,208.0$
Total Assets 26,211.0$ 29,163.0$ 31,321.0$ 38,488.0$ 40,556.0$ 48,263.0$ 53,317.0$ 58,025.0$ 70,556.0$ 80,954.0$ 87,724.0$
Accts Payable 1,861.0$ 2,003.0$ 2,083.0$ 2,838.0$ 3,621.0$ 4,966.0$ 5,227.0$ 4,315.0$ 5,691.0$ 6,909.0$ 6,384.0$
Short-Term Debt 2,747.0$ 1,806.0$ 1,479.0$ 565.0$ 2,117.0$ 1,139.0$ 280.0$ 668.0$ 4,579.0$ 2,463.0$ 6,245.0$
Taxes Payable 206.0$ 206.0$ 314.0$ 537.0$ 710.0$ 944.0$ 1,506.0$ 940.0$ 724.0$ 223.0$ 458.0$
Accrued Liabilities 3,348.0$ 3,439.0$ 3,264.0$ 4,104.0$ 5,001.0$ 6,399.0$ 6,914.0$ 6,712.0$ 8,167.0$ 10,242.0$ 9,643.0$
Other Short-Term
Liabilities -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Total Current Liabilities 8,162.0$ 7,454.0$ 7,140.0$ 8,044.0$ 11,449.0$ 13,448.0$ 13,927.0$ 12,635.0$ 19,161.0$ 19,837.0$ 22,730.0$
Long-Term Debt 1,269.0$ 2,450.0$ 2,037.0$ 2,217.0$ 2,022.0$ 2,955.0$ 2,565.0$ 2,017.0$ 2,014.0$ 7,074.0$ 8,395.0$
Other Long-Term
Liabilities 3,190.0$ 3,046.0$ 3,336.0$ 3,994.0$ 4,388.0$ 4,991.0$ 5,012.0$ 5,502.0$ 10,063.0$ 10,724.0$ 10,865.0$
Total Liabilities 12,621.0$ 12,950.0$ 12,513.0$ 14,255.0$ 17,859.0$ 21,394.0$ 21,504.0$ 20,154.0$ 31,238.0$ 37,635.0$ 41,990.0$
Total Equity 13,590.0$ 16,213.0$ 18,808.0$ 24,233.0$ 22,697.0$ 26,869.0$ 31,813.0$ 37,871.0$ 39,318.0$ 43,319.0$ 45,734.0$
Total Liabilities & Equity 26,211.0$ 29,163.0$ 31,321.0$ 38,488.0$ 40,556.0$ 48,263.0$ 53,317.0$ 58,025.0$ 70,556.0$ 80,954.0$ 87,724.0$
Liabilities & Stockholders' Equity
JOHNSON & JOHNSON
Company Name
Income Statement
Operating Expenses
Other Income and Expense
Balance Sheet
ticker
JNJ
Assets
all figures in $Mil
Financial Data
Net Income 3,059.0$ 4,167.0$ 4,800.0$ 5,668.0$ 6,597.0$ 7,197.0$ 8,509.0$ 10,411.0$ 11,053.0$ 10,576.0$ 12,609.0$
Depr & Amort 1,246.0$ 1,444.0$ 1,515.0$ 1,605.0$ 1,662.0$ 1,869.0$ 2,124.0$ 2,093.0$ 2,177.0$ 2,777.0$ 2,992.0$
Deferred Taxes (239.0)$ (7.0)$ (167.0)$ (106.0)$ (74.0)$ (720.0)$ (498.0)$ (46.0)$ (1,168.0)$ (1,762.0)$ (1,216.0)$
Other 820.0$ 73.0$ 415.0$ 1,697.0$ (9.0)$ 2,249.0$ 996.0$ (581.0)$ 2,186.0$ 3,658.0$ 910.0$
Cash from Operations 4,886.0$ 5,677.0$ 6,563.0$ 8,864.0$ 8,176.0$ 10,595.0$ 11,131.0$ 11,877.0$ 14,248.0$ 15,249.0$ 15,295.0$
Cap Ex (1,460.0)$ (1,728.0)$ (1,646.0)$ (1,731.0)$ (2,099.0)$ (2,262.0)$ (2,175.0)$ (2,632.0)$ (2,666.0)$ (2,942.0)$ (3,176.0)$
Purchase of Business (3,481.0)$ (271.0)$ (68.0)$ (225.0)$ (478.0)$ (2,812.0)$ (580.0)$ (987.0)$ (18,023.0)$ (1,388.0)$ (410.0)$
Other (698.0)$ (943.0)$ (654.0)$ (2,137.0)$ 380.0$ 548.0$ 408.0$ 3,340.0$ 398.0$ (1,809.0)$ 512.0$
Cash from Investing (5,639.0)$ (2,942.0)$ (2,368.0)$ (4,093.0)$ (2,197.0)$ (4,526.0)$ (2,347.0)$ (279.0)$ (20,291.0)$ (6,139.0)$ (3,074.0)$
Net Issuance of Stock (661.0)$ (577.0)$ (681.0)$ (2,056.0)$ (6,148.0)$ (872.0)$ (742.0)$ (1,021.0)$ (5,587.0)$ (4,045.0)$ (7,237.0)$
Net Issuance of Debt 2,510.0$ 10,654.0$ 818.0$ 352.0$ 2,381.0$ 4,085.0$ 531.0$ 1,221.0$ 6,391.0$ 24,726.0$ 8,831.0$
Dividends (1,305.0)$ (1,479.0)$ (1,724.0)$ (2,047.0)$ (2,381.0)$ (2,746.0)$ (3,251.0)$ (3,793.0)$ (4,267.0)$ (4,670.0)$ (4,934.0)$
Other (642.0)$ (10,892.0)$ (1,513.0)$ (1,500.0)$ (805.0)$ (4,330.0)$ (1,686.0)$ (928.0)$ (2,646.0)$ (21,709.0)$ (1,502.0)$
Cash from Financing (98.0)$ (2,294.0)$ (3,100.0)$ (5,251.0)$ (6,953.0)$ (3,863.0)$ (5,148.0)$ (4,521.0)$ (6,109.0)$ (5,698.0)$ (4,842.0)$
Currency Adj -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Change in Cash (826.0)$ 369.0$ 1,048.0$ (520.0)$ (864.0)$ 2,483.0$ 3,826.0$ 6,852.0$ (11,972.0)$ 3,687.0$ 7,378.0$
Cash from Operations 4,886.0$ 5,677.0$ 6,563.0$ 8,864.0$ 8,176.0$ 10,595.0$ 11,131.0$ 11,877.0$ 14,248.0$ 15,249.0$ 15,295.0$
Cap Ex (1,460.0)$ (1,728.0)$ (1,646.0)$ (1,731.0)$ (2,099.0)$ (2,262.0)$ (2,175.0)$ (2,632.0)$ (2,666.0)$ (2,942.0)$ (3,176.0)$
Free Cash Flow 2,845.0$ 3,883.0$ 4,669.0$ 5,542.0$ 5,994.0$ 6,804.0$ 8,458.0$ 8,618.0$ 10,564.0$ 10,411.0$ 11,813.0$
Book Value Per Share #DIV/0! 5.72$ 6.66$ 7.87$ 7.43$ 8.96$ 10.62$ 12.59$ 13.27$ 14.87$ 16.00$
Free Cash Flow
Cash Flows Statement
Cash Flows From Operating Activities
Cash Flows From Investing Activities
Cash Flows From Financing Activities
2/18/2009 User Growth
12.00%
Desired MOS Growth Discount % Price Share Value Buy under Actual D/C % 52Wk High 52Wk Low
50% 12.0% 9.0% 55.83$ 71.67$ 35.84$ 22% $72.76 $52.06
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Revenue 23,657.0$ 27,471.0$ 29,139.0$ 33,004.0$ 36,298.0$ 41,862.0$ 47,348.0$ 50,514.0$ 53,324.0$ 61,095.0$
Gross Profit 16,161.0$ 19,029.0$ 20,278.0$ 23,468.0$ 25,851.0$ 29,686.0$ 33,926.0$ 36,560.0$ 38,267.0$ 43,344.0$
Operating Income 4,117.0$ 5,704.0$ 6,389.0$ 7,595.0$ 9,195.0$ 10,338.0$ 12,830.0$ 13,223.0$ 13,821.0$ 13,127.0$
Net Income 3,059.0$ 4,167.0$ 4,800.0$ 5,668.0$ 6,597.0$ 7,197.0$ 8,509.0$ 10,411.0$ 11,053.0$ 10,576.0$
Diluted EPS -$ 1.5$ 1.7$ 1.8$ 2.2$ 2.4$ 2.8$ 3.5$ 3.7$ 3.6$
Cash from Operations 4,886.0$ 5,677.0$ 6,563.0$ 8,864.0$ 8,176.0$ 10,595.0$ 11,131.0$ 11,877.0$ 14,248.0$ 15,249.0$
Free Cash Flow 2,845.0$ 3,883.0$ 4,669.0$ 5,542.0$ 5,994.0$ 6,804.0$ 8,458.0$ 8,618.0$ 10,564.0$ 10,411.0$
Current Assets 11,132.0$ 13,200.0$ 15,450.0$ 18,473.0$ 19,266.0$ 22,995.0$ 27,320.0$ 31,394.0$ 22,975.0$ 29,945.0$
Current Liabilities 8,162.0$ 7,454.0$ 7,140.0$ 8,044.0$ 11,449.0$ 13,448.0$ 13,927.0$ 12,635.0$ 19,161.0$ 19,837.0$
Total Liabilities 12,621.0$ 12,950.0$ 12,513.0$ 14,255.0$ 17,859.0$ 21,394.0$ 21,504.0$ 20,154.0$ 31,238.0$ 37,635.0$
Tangible Shareholder Equity 6,381.0$ 8,642.0$ 11,552.0$ 15,156.0$ 13,451.0$ 15,330.0$ 19,971.0$ 25,696.0$ 10,630.0$ 14,556.0$
Gross Margin 68.3% 69.3% 69.6% 71.1% 71.2% 70.9% 71.7% 72.4% 71.8% 70.9%
Operating Margin 17.4% 20.8% 21.9% 23.0% 25.3% 24.7% 27.1% 26.2% 25.9% 21.5%
Net Margin 12.9% 15.2% 16.5% 17.2% 18.2% 17.2% 18.0% 20.6% 20.7% 17.3%
Current Assets>1.5 times 136.4% 177.1% 216.4% 229.6% 168.3% 171.0% 196.2% 248.5% 119.9% 151.0%
CROIC 26.2% 27.5% 27.6% 25.9% 30.2% 29.2% 30.7% 25.9% 46.5% 32.2%
FCF/Sales 12.0% 14.1% 16.0% 16.8% 16.5% 16.3% 17.9% 17.1% 19.8% 17.0%
Inventory Turnover 262.7% 272.8% 311.8% 318.7% 316.3% 339.4% 358.5% 352.5% 308.0% 347.4%
Return On Assets (ROA) 0.0% 15.1% 15.9% 16.2% 16.7% 16.2% 16.8% 18.7% 17.2% 14.0%
Retun On Equity (ROE) 0.0% 28.0% 27.4% 26.3% 28.1% 29.0% 29.0% 29.9% 28.6% 25.6%
Debt to Equity 92.9% 79.9% 66.5% 58.8% 78.7% 79.6% 67.6% 53.2% 79.4% 86.9%
Capitalization Ratio 8.5% 13.1% 9.8% 8.4% 8.2% 9.9% 7.5% 5.1% 4.9% 14.0%
FCF to Debt 22.5% 30.0% 37.3% 38.9% 33.6% 31.8% 39.3% 42.8% 33.8% 27.7%
1998-2005 1999-2006 2000-2007 1998-2003 1999-2004 2000-2005 2001-2006 2002-2007
Shareholder Equity 22.0% 3.0% 3.4% 19.2% 18.2% 17.3% -6.8% 1.6%
Free Cash Flow 17.2% 15.4% 12.1% 19.1% 16.8% 13.0% 13.8% 11.7%
CROIC 27.5% 28.4% 29.7% 27.5% 28.4% 28.4% 29.7% 30.4%
FCF/Sales 16.4% 16.7% 16.9% 16.1% 16.4% 16.7% 16.9% 17.1%
ROA 16.2% 16.5% 16.5% 16.0% 16.2% 16.5% 16.7% 16.7%
ROE 28.0% 28.4% 28.4% 27.7% 28.0% 28.6% 28.8% 28.8%
Revenue Growth 11.4% 9.9% 11.2% 12.1% 11.5% 11.6% 10.1% 11.0%
Gross Margin 71.0% 71.2% 71.2% 70.3% 71.0% 71.2% 71.4% 71.4%
Operating Margin 23.9% 25.0% 25.0% 22.5% 23.9% 25.0% 25.6% 25.6%
Net Margin 17.2% 17.6% 17.6% 16.8% 17.2% 17.6% 18.1% 18.1%
Earnings Growth 0.0% 14.2% 11.4% 0.0% 14.1% 15.3% 15.2% 10.9%
Cash from Ops Growth 13.5% 14.0% 12.8% 16.7% 14.4% 12.6% 10.0% 13.3%
17.6%
Company Name ticker
Median
10.3%
JNJ
Multi-Year Performance
JOHNSON & JOHNSON
13.4%
11.3%
71.2%
all figures in $Mil
Income Sheet Data
16.7%
Efficiency & Profitability
User Input Params
Financial Data
Margins
Cash Flow Data
Balance Sheet Data
14.6%
Debt Related
28.4%
28.4%
16.5%
12.8%
25.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Growing at 12.0% 11,660$ 13,060$ 14,627$ $15,691.03 $17,385.66 $19,263.31 $21,343.75 $21,866.48 $23,991.90 $26,323.91
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Growing at 3% 27,114$ 27,927$ 28,765$ 29,628$ 30,517$ 31,432$ 32,375$ 33,346$ 34,347$ 35,377$
Total Value
Shares Outstanding
Per Share Value
Margin of Safety
Purchase Price
Current Price
Actual Discount
Efficiency & Profitability Debt
50%
35.84$
71.67$
208,780$
2913
Free Cash Flow and Tangible Shareholder Equity Trend
Projection of future Free Cash Flow
Company Valuation
Margin Percentages
55.83$
22%
68.3% 69.3% 69.6% 71.1% 71.2% 70.9% 71.7% 72.4% 71.8% 70.9%
17.4%20.8% 21.9% 23.0%
25.3% 24.7%27.1% 26.2% 25.9%
21.5%
12.9%15.2% 16.5% 17.2% 18.2% 17.2% 18.0%
20.6% 20.7%17.3%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Gross Margin
Operating Margin
Net Margin
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
CROIC FCF/Sales ROA ROE
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Debt to Equity Capitalization Ratio FCF to Debt
$2,845.0 $3,883.0 $4,669.0 $5,542.0 $5,994.0 $6,804.0 $8,458.0 $8,618.0
$10,564.0 $10,411.0
$6,381.0 $8,642.0
$11,552.0
$15,156.0 $13,451.0
$15,330.0
$19,971.0
$25,696.0
$10,630.0
$14,556.0
$-
$5,000.0
$10,000.0
$15,000.0
$20,000.0
$25,000.0
$30,000.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
FCF Shareholder Equity
Company Name
JOHNSON & JOHNSON
Desired MOS Growth Discount % Price Share Value Buy under Actual D/C % 52Wk High 52Wk Low
50% 12.0% 9% 55.83$ 71.67$ 35.84$ 22% 72.76$ 52.06$
Historical Stock Price Vs Intrinsic Value Per Share
ticker
JNJall figures in $Mil 2/18/2009
0
10
20
30
40
50
60
70
80
3/2/1998 3/2/1999 3/2/2000 3/2/2001 3/2/2002 3/2/2003 3/2/2004 3/2/2005 3/2/2006 3/2/2007 3/2/2008
Historical Price Intrinsic Value Buy Price Linear (Historical Price)
2/18/2009
Desired MOS Growth Price Actual DC% Share Value Buy under P/B Ratio
66% 12.0% 55.83$ 49% 108.47$ 36.88$ 3.75
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
-$ 1.47$ 1.70$ 1.84$ 2.16$ 2.40$ 2.84$ 3.46$ 3.73$ 3.63$
2008 2009 2010 2011
4.45$ 4.78$ 5.17$ 5.74$
1998-2003 1999-2004 2000-2005 2001-2006 2002-2007 1998-2001 1999-2002 2000-2003
Earnings Growth 0.0% 14.1% 15.3% 15.2% 10.9% 0.0% 13.7% 12.2%
EPS Weighted Average 1.60$ 2.07$ 2.40$ 2.74$ 3.04$ 1.25$ 1.79$ 2.03$
2001-2004 2002-2005 2003-2006 2004-2007
Earnings Growth 15.57% 17.01% 15.83% 8.52%
EPS Weighted Average 2.31$ 2.72$ 3.11$ 3.42$
4.09$
12.00%
5.86
14.87
3.75
66.08
108.47$
66.00%
36.88$
55.83$
49%
$2.36
13.9%
Enterprise Value Per Share
Company Stats
Normal Earnings
Expected 5 Year Growth
20 yr AA Corp Bond Rate
Actual Discount
Company Name ticker
JOHNSON & JOHNSON JNJall figures in $Mil
Earnings
Multi-Year Performance
User Input ParamsNet Net Working Capital
(6.05)$
Purchase Price
Current Price
Company Valuation
Per Share Value
Desired MOS
Book Value Per Share
Price to Book Ratio
Median (1998-2007)
Diluted EPS
$-
$1.47 $1.70 $1.84
$2.16 $2.40
$2.84
$3.46 $3.73 $3.63
$4.45 $4.78
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
EPS
Linear (EPS)
Company Name
JOHNSON & JOHNSON2/18/2009
JNJ ABT BMY PG BSX NVS Industry Ranking
Stock Price 55.83 54.2 20.92 50.95 8.46 41.9 NA NA
Market Cap (millions) 154,900 84,100 41,300 149,330 12,700 94,900 NA NA
Valuation Ratios
P/E Ratio (TTM) 12.27 17.77 13.37 13.6 0 11.74 3.38 4
Price to Sales (TTM) 2.44 2.83 2.04 1.76 1.59 2.22 0.89 2
Price to Book (MRQ) 0 0 0 2.4 0.98 1.88 1.69 4
Price to Tangible Book (MRQ) 0 0 0 0 0 3.21 4.24 2
Price to Cash Flow (TTM) 0 0 0 9.71 0 10.08 1.43 3
Price to Free Cash Flow (TTM) 0 0 0 23.65 0 12.52 116.88 3
Dividends
Dividend Yield 3.29 2.67 5.84 3.19 NA 4.12 0.14 3
Dividend Yield - 5 Year Avg. 2.29 2.48 4.61 2.05 0 1.95 1.57 3
Dividend 5 Year Growth Rate 14.18 8 2.06 12.08 0 15.96 20.57 2
Payout Ratio (TTM) 0 0 0 39.47 0 41.17 5.97 3
Growth Rates
Sales (MRQ) vs Qtr. 1 Yr. Ago -4.86 10.09 3.78 -3.18 -6.97 1.74 1.63 5
Sales (TTM) vs TTM 1 Yr. Ago 2.44 2.83 2.04 1.76 1.59 2.22 0.89 2
Sales - 5 Yr. Growth Rate 8.77 11.31 2 14 18.29 11.36 10.81 5
EPS (MRQ) vs Qtr. 1 Yr. Ago 17.7 15.4 723.8 -2.27 -426.78 61.46 -22.97 3
EPS (TTM) vs TTM 1 Yr. Ago 25.63 31.27 80.59 12.93 -315.8 27.59 0 4
EPS - 5 Yr. Growth Rate 13.75 13.74 -0.01 14.53 0 17.76 10.51 3
Capital Spending - 5 Yr. Growth Rate 0 0 0 15.5 0 8.46 1.79 3
Financial Strength
Quick Ratio (MRQ) 0 0 0 0.46 1.43 0.91 2.72 4
Current Ratio (MRQ) 0 0 0 0.69 1.7 1.27 3.15 4
LT Debt to Equity (MRQ) 0 0 0 31.75 51.32 4.33 11.28 4
Total Debt to Equity (MRQ) 0 0 0 66.9 51.34 14.64 16.02 4
Profitability
Gross Margin (TTM) 70.96 57.29 68.95 50.7 69.33 73.14 8.7 2
Gross Margin - 5 Yr. Avg. 71.45 55.5 68.38 51.38 73.17 73.01 66.37 3
EBITD Margin (TTM) 0 0 0 24.04 -9.55 23.94 0 3
EBITD - 5 Yr. Avg. 0 0 0 23.53 2.48 28.68 22.6 4
Operating Margin (TTM) 26.56 19.28 26.56 20.04 -19.08 21.05 0.62 1
Operating Margin - 5 Yr. Avg. 25.45 17.16 21.03 19.51 -5.42 20.51 19.39 1
Pre-Tax Margin (TTM) 26.56 19.83 26.56 18.96 -25.63 22.31 4.16 1
Pre-Tax Margin - 5 Yr. Avg. 25.45 17.8 21.03 18.46 -10.46 22.03 22.82 1
Net Profit Margin (TTM) 20.31 16.03 20.15 14.3 -25.74 19.17 3.57 1
Net Profit Margin - 5 Yr. Avg. 19.14 13.85 15.79 13.13 -12.33 18.87 13.54 1
Management Effectiveness
Return On Assets (TTM) 0 0 0 8.46 -7.11 10.62 0.78 3
Return On Assets - 5 Yr. Avg. 0 0 0 9.09 -4.7 10.32 7.64 3
Return On Investment (TTM) 0 0 0 11.18 -8 13.57 1.01 3
Return On Investment - 5 Yr Avg 0 0 0 12.05 -5.39 13.45 9.52 3
Return On Equity (TTM) 0 0 0 18.41 -14.68 16.33 1.43 3
Return On Equity - 5 Yr. Avg. 0 0 0 21.61 -9.54 16.47 10.49 3
Efficiency
Revenue/Employee (TTM) 0 0 0 606370 0 440281 2444586 NA
Net Income/Employee (TTM) 0 0 0 86688 0 84398 166242 NA
Receivable Turnover (TTM) 0 0 0 11.43 5.54 6.23 0.48 NA
Inventory Turnover (TTM) 0 0 0 5.13 3.13 2.03 0.24 NA
Asset Turnover (TTM) 0 0 0 0.59 0.28 0.55 0.08 4
ticker
JNJall figures in $Mil Enter Competitor Tickers Into Boxes Below
Company Name
JOHNSON & JOHNSON
TTM 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12 TTM 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12
20% 17% 21% 21% 18% 17% 18% 17% 16% 15% 13% 15295 15249 14248 11877 11131 10595 8176 8864 6563 5677 4886
% Change -16.5% 0.6% 14.7% 4.5% -5.4% 5.8% 4.3% 8.6% 17.3% -- % Change 7.0% 20.0% 6.7% 5.1% 29.6% -7.8% 35.1% 15.6% 16.2% --
Now 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12 Now 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12
0.66 0.77 0.93 0.57 0.64 0.66 0.70 0.60 0.63 0.70 0.77 13.0% 10.1% 8.5% 10.5% 8.9% 9.8% 8.4% 6.3% 7.6% 7.5% 6.6%
% Change -17.5% 61.7% -10.8% -2.3% -6.1% 15.8% -3.8% -9.6% -9.7% -- % Change 18.9% -18.6% 17.6% -9.4% 16.8% 32.8% -16.7% 1.0% 14.2% --
2008/09 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12 2008/09 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12
14% 13% 16% 18% 16% 15% 16% 15% 15% 14% 12% 27.6% 24.4% 28.1% 27.5% 26.7% 26.8% 29.1% 23.4% 25.5% 25.7% 22.5%
% Change -16.6% -12.3% 11.9% 7.4% -8.6% 10.9% -3.9% 7.0% 22.2% -- % Change -13.2% 2.2% 3.0% -0.4% -7.9% 24.4% -8.2% -0.8% 14.2% --
2008/09 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12 2008/09 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12
1.6 1.5 1.2 2.5 2.0 1.7 1.7 2.3 2.2 1.8 1.4 1.4 1.3 0.9 2.2 1.7 1.4 1.4 1.9 1.8 1.4 1.0
% Change 25.9% -51.7% 26.7% 14.7% 1.6% -26.7% 6.1% 22.2% 29.8% -- % Change 32.6% -56.5% 28.3% 17.3% 3.5% -27.6% 9.0% 30.3% 33.6% --
Return on Assets (ROA) Return on Equity (ROE)
Current Ratio Quick Ratio
2/18/2009
ticker
JNJ
Net Profit Margin Cash Flow (Continuing Operations)
Magic Formula Investing -- Return on Capital Magic Formula Investing -- Earnings Yield
20%17%
21% 21%18% 17% 18% 17% 16%
15%13%
15295 1524914248
11877 11131 10595
8176 8864
65635677 4886
0.660.77
0.93
0.570.64 0.66 0.70
0.60 0.630.70
0.7713.0%
10.1%8.5%
10.5%8.9%
9.8%8.4%
6.3%7.6% 7.5%
6.6%
14%13%
16%18%
16%15%
16%15% 15%
14%
12%27.6%
24.4%28.1% 27.5% 26.7% 26.8%
29.1%
23.4%25.5% 25.7%
22.5%
1.6 1.51.2
2.5
2.01.7 1.7
2.3 2.2
1.8
1.41.4
1.3
0.9
2.2
1.71.4 1.4
1.91.8
1.4
1.0
2/18/2009
Criteria over 10yrs Value Points User Points
> 25% or 50% depending on
moat22% 1 1
> 66% 49% 0
Criteria over 10yrs Value Points User Points
10% 11.3% 1
30% 71.2% 1
15% 25.0% 1
10% 17.6% 1
10% 13.9% 1
Criteria over 10yrs Value Points User Points
15% 13.4% 0
13% 28.4% 2
10% 14.6% 1
7% 16.7% 2
Consistent over 10yrs N/A N/A
Consistent over 10yrs N/A N/A
Criteria for TTM Value Points User Points
> 1.5 x current liabilities 1.5 1
N/A 3.75 N/A N/A
< 100% 86.9% 1
> 10% 27.7% 1
< 30% 14% 1
< 15% of assets 32.6% 0 Intangibles % of assets
Median Revenue growth
Debt to Equity
FCF to Debt
Capitalization Ratio
Price to Book ratio < 2
Cash growth from Operations
Company Name ticker
JOHNSON & JOHNSON JNJall figures in $Mil
Company Assessment: Quantitative
Median FCF growth positive and consistent
Balance Sheet
Valuation
DCF Valuation Discount
Graham Intrinsic Value Discount
Margins, Profit and Growth
Current assets > 1.5 x current liabilities
Median FCF/Sales
Consistent ROE (manually check)
Consistent ROA (manually check)
Median Gross Margin
Median Operating Margin
Median Net Margin
Median EPS growth
Business and Management Performance
CROIC is postive and capable of paying off financing
User Points Max Points
2 max 2
2 max 2
1 max 2
1 max 2
1 max 2
0 max 2
User Points Max Points
1 max 2
1 max 1
1 max 1
0 max 1
1 max 1
1 max 2
1 max 1
0 max 1
User Points Max Points
1 max 1
1 max 1
1 max 1
1 max 1
User Points Max Points
1 max 1
1 max 1
0 max 1
Bias from commitment and consistency tendency?
Pavlovian association?
Social proof bias?
Status quo bias?
False consensus bais?
Comment
Am I too overconfident on the situation?
Performed probability analysis for -ve factors?
Too much loss aversion?
Sunk cost mentality?
Slow in changing opinion?
Psychological denial ?
Psychological Factors to Consider. Not Weighted.
Recency bias?
Hindsight bias?
Framing issues correctly and in different manners?
Is there a data framing bias?
Company Assessment: Qualitative
Johnson & Johnson is engaged in the research and development, manufacture and sale of a range of products in the healthcare
field. Johnson & Johnson has more than 250 operating companies. The Company operates in three segments: Consumer,
Pharmaceutical, and Medical Devices and Diagnostics. Sales of the Company's two largest products, RISPERDAL and REMICADE,
accounted for approximately 6% and 5% of Johnson & Johnson�s total revenues, respectively, during the fiscal year ended
December 30, 2007 (fiscal 2007). During fiscal 2007, the Company acquired three companies: Conor Medsystems, Inc., which is a
cardiovascular device company, with new drug delivery technology; Robert Reid, Inc., which is a Japanese orthopedic product
distributor, and Maya�s Mom, Inc., which is a social media company. In October 2008, the Company acquired HealthMedia, Inc. In
December 2008, Johnson & Johnson acquired Omrix Biopharmaceuticals, Inc.
Competitive Advantage
Stable market share?
Dominant company in industry, segment?
Low barriers to entry and exit?
Experience goods (brand effect, trademarks)
High switching costs?
Network effect? E.g. eBay
Management
High insider ownership?
Candid management on positives and negatives?
Management performance at previous jobs?
Business Model
Growth due to:
a) existing product / existing market (yes/no)
b) existing product / new market (yes/no)
c) new product / existing market (yes/no)
d) new product / new market (yes/no)
Able to increase prices and retain customers?
Compensation levels compared to sales?
Industry
Boring industry? (1 for slow, 0 for fast industry)
Can company adapt to changing industry environment?
Industry leader or lagger? (1 for leader, 0 for lagger)
Compete on price? (1 for no, 0 for yes)
Barriers of entry to the business?
Diverse customers? (1 for diverse, 0 for concentrated)
Involved in competition? Monopoly, duopoly, crowded
Company has a recurring revenue stream?
Capital intensive company? (1 for no, 0 for yes)
Comment
a) No
b) Yes
c) Yes
d) Yes
no
no
no
no
DCF, graham, compare to peers
maybe
no
no
no
no
no
Comment
Comment
Comment
no
no
no
no
Total Points out of 5
1.0
5.0
2.5
4.0
2.9
3.0
5.0
Low Risk High Growth Under Valued Well Managed Good Financial Health Strong Moat
4.0 2.0 3.0 4.0 4.0 4.0
4.0 2.0 3.0 4.0
Competitive Advantage
Business Model
Management
Category
Valuation
Margins, Profit and Growth
Business and Management Performance
Balance Sheet
0.0
1.0
2.0
3.0
4.0
5.0Low Risk
High Growth
Under Valued
Well Managed
Good Financial Health
Strong Moat
JNJ
